Golden Entertainment to acquire American Casino & Entertainment Properties

American is expected to generate approximately $413 million of net revenues and $103 million of EBITDA in 2017, and Golden expects to achieve approximately $18 million of annual run-rate synergies post-closing. The purchase price of $850 million includes working capital cash estimated to be approximately $28 million at closing.

The purchase consideration will consist of $781 million cash plus approximately four million shares of Golden stock issued to American’s current owner, Whitehall Street Real Estate Partners 2007 (“Whitehall”), a real estate private equity fund managed by the Merchant Banking Division of Goldman Sachs. The number of shares issued to Whitehall was determined based on Golden’s 10-day volume weighted average price of $17.05 as of June 9, 2017.

Upon closing, Whitehall will own approximately 15% of Golden’s diluted shares outstanding. The transaction is expected to be immediately accretive to Golden’s operating results, increasing free cash flow and earnings per share significantly. Based on American’s estimated 2017 EBITDA, the acquisition represents an 8.0x pre-synergies multiple and a 6.8x post-synergies multiple.

The transaction is not subject to a financing condition. Golden has received committed financing totaling $1.1 billion from JPMorgan Chase Bank, N.A., Credit Suisse, Macquarie Capital and Morgan Stanley & Co. LLC to fund the cash consideration as well as to refinance Golden’s existing credit facilities. The financing commitment includes a $100 million revolving credit facility to support Golden’s future organic and strategic growth initiatives.

Blake L. Sartini, Chairman and Chief Executive Officer of Golden, commented, “This is a transformational event for our Company, creating a significant gaming portfolio centered around Nevada-based casinos that, in addition to our Pahrump properties, will include two well-known Las Vegas locals casinos, a destination resort in Laughlin, and the iconic Stratosphere property on the Las Vegas Strip. Our market leading distributed gaming businesses in Nevada and Montana, as well as our Casino Resort in Maryland, present several opportunities to cross-market and promote these new assets that we welcome to the Golden family. As with our existing businesses, we believe the American properties are poised to benefit tremendously from anticipated continued economic growth in Nevada, particularly from the continued strength in the Las Vegas market.”

Charles Protell, Chief Financial Officer of Golden, concluded, “This transaction significantly increases the size of our operations and allows us to access the capital markets more efficiently while enhancing our ability to further expand our leading presence in distributed gaming. At closing, we anticipate our funded total debt to be approximately $1 billion resulting in a net leverage ratio of less than 5.5x. Post-closing, we anticipate leverage will be reduced by operating cash flow of the combined businesses. In addition, we expect that our new credit facility will provide us with the flexibility and liquidity to pursue future organic and strategic opportunities.